It’s the Money

This time of the year is when various health care publications get around to looking at the past year’s events as well as making predictions for the new year. They tap into pundits who usually have an agenda for many of their predictions, thus providing a satisfyingly closed echo chamber.

So sitting on the beach I will weigh in with a comment or two about several developments of note for the new year. I am fully aware that observing from the beach is easy which makes me an amateur pundit of sorts which does not please me.

Of special interest to me in the past year has been the progress of the merger of Dignity Health and Catholic Health Initiatives (CHI) to form a mega-monster health system consisting of 140 hospitals and assorted other endeavors. The new entity will be called CommonSpirit Health which sounds like the expensive result of working with a branding consultant. I don’t recall a St. CommonSpirit from my Catholic background so my guess is this is a further attempt to distance the new organization from its Catholic roots as has been the case with Dignity Health in recent years.

It is always difficult to merge two organizations, especially when neither one has been especially stellar financially. CHI, in particular, has been hemorrhaging red ink for several years, no doubt the result of having achieved operating efficiencies from previous mergers of smaller Catholic health systems. The expectation is that by merging with Dignity Health, these financial problems will disappear. Bigness overcomes such problems according to the financial analysts. How could they be wrong?

CommonSpirit Health, showing great courage and decision-making boldness, will be managed by co-CEOs, i.e., the former CEOs Of CHI and Dignity. That is a surefire formula for success–for about two months.

My prediction–experience shows that even with the good intentions of the co-CEOs, there will be within a year just one CEO tasked with managing and making sense of an ungainly and financially challenged organization.

The other big merger of note which will begin operating in earnest in 2019 involves CVS Health and Aetna. This seems to be an unnatural combination, akin to breeding a goat with a skunk.

CVS Health is, of course, best known for its ubiquitous drug stores on every corner where there used to be a gas station. They are very easy to find. All you need to do is look for a Walgreen’s and sure enough there will be a CVS across the street.

CVS’ other business is acting as a pharmacy benefit manager which is where, I suppose, the synergies will come with the merger with Aetna whose health plans have been also-rans in most markets. Still,, this combination really seems a reach and like a good way to lose a great deal of money.

There is no shortage of other health care related endeavors thrashing around in this new year. It is telling that no one mentions a goal of improving patient care in any of these machinations.

Bottom line though is the bottom line. All this activity is less about health care than it is about the money. What a waste.

Share this:

Like this:

LikeLoading...

Published by Gary Passama

Gary Passama retired as president and CEO of NorthBay Healthcare in Fairfield, California, on March 31, 2017. He has over 45 years of experience as a senior manager, the last 35 years of which were spent as CEO of NorthBay. He holds a Bachelor of Science (Honors) degree in Business Administration and a Master of Public Health degree in Hospital Administration, both from the University of California, Berkeley. He also likes the beach.
View all posts by Gary Passama